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Slide 1: Meet the NSE

The Nigerian Stock Exchange (NSE) is a company limited by guarantee. The bourse services the 2nd largest financial center in sub-Saharan Africa, and is the 3rd largest stock exchange in Africa by capitalization –Nigeria $75.8b – as of April 2012.

The Exchange services approximately 5 million registered investors. In 2011, foreign investors accounted for 67% of total market transactions (or 81% of total inflows).

The NSE has 234 active dealing members and 28 member issuing houses. We offer:- Equities: 199 listed cos. N6.58t ($42.40b) market cap (as of 31-May-2012)- Bonds: 56 bonds N5.25t ($33.65b) market cap- ETFs: 1 ETF N1.09b ($7.05m) AUM

The Exchange maintains 14 electronic trading floors around Nigeria.

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Slide 1: Meet Our First Rate Listed Companies

The NSE is a first rate market that is home to numerous first-rate companies, successfully operating in Nigeria, in other countries on the continent, and even globally. For example, UBA operates in over 16 countries: Benin, Cameroon, Cote d'Ivoire, Ghana, Liberia, Nigeria, Senegal, Sierra Leone, Uganda, Zambia, Tanzania, Tchad, Kenya, Burkina Faso, Gabon and Guinea.

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Slide 3: Meet Our Broker-Dealer Members

Issuers and investors in the Nigerian capital markets have access to world-class brokerage, advisory, portfolio management and primary issue service providers. The Nigerian Stock Exchange requires all international investors access our market with the assistance and professional guidance of any of our broker-dealer members.

CSL Stockbrokers LimitedCSL Stockbrokers Limited (CSL) is the longest established stockbroker on the NSE, and one of the largest in terms of value traded. CSL is a 100%-owned subsidiary of FCMB, possessing unrivalled experience bringing primary issues to the market. CSL is one of the 10 recently-appointed Market Makers for the NSE’s equity market. We service our diverse group of Africa and Frontier Market-focused clients through our Europe office, located in London.

Dunn Loren MerrifieldDunn Loren Merrifield (DLM) is a full-service investment house with a global focus. DLM offers full-service investment banking products, tailored to meet their clients preferences and objectives. DLM combines the attributes of origination, distribution, trading and research.

FBN Securities LimitedFBN Securities is a subsidiary of FBN Capital, the investment banking and asset management arm of the First Bank group. We are one of the leading names in trading fixed income securities and equities in the secondary market.Our modern trading infrastructure ensures our ability to services our clients efficiently and professionally. FBN Securities is one of the recently-appointed Market Makers on the NSE.

Greenwich Securities LimitedGreenwich Securities Limited (GSL) is a subsidiary of Greenwich Trust Group, a leading investment banking firm in Nigeria. GSL provides stockbroking and placement services to issuers bringing primary offers to the market. Our trading facility offers clients access to equities, government paper, debentures, bonds and other securities. GSL isone of the recently-appointed Market Makers on the NSE.

Renaissance CapitalRenaissance Capital, a leading investment bank focused on emerging markets (EM) and Africa, has a global presence in 20 countries, six in Africa. The firm’s global securities distribution and research is managed from hubs in London, New York, Moscow and Hong Kong. Renaissance Capital’s on-the-ground presence in key African markets complement’s the firm’s established EM platform, and its focus on intermediating cross-border investment flows.

Stanbic IBTC Stockbrokers LimitedStanbic IBTC Stockbrokers is the wholly-owned subsidiary of Stanbic IBTC Bank Plc (a member of Standard Bank Group). We have consistently been Nigeria’s largest stockbroking firm in terms of transaction value (2005 to 2011, and 19.71% of market share YTD 2012). Stanbic IBTC Stockbrokers services an array of international clients, specifically Africa-focused and Frontier Market funds.

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Slide 4: Performance of the NSE - The Boom Years

Consequences of the steady rise in Liquid Gold price - 2004 to 2008- From $25/barrel to $110.20/barrel on 12-Mar-08- Banking system flooded by oil revenues, driving up deposits and lending, and accelerating

credit creation- Banking assets grew 76% avg. post-consolidation- Real sector unable to absorb excess liquidity from oil revenues and foreign investments in

productive sectors, driving flows to non-priority sectors and the capital market- Increases in margin loans and proprietary trading- Lacking regulatory framework enabled surge in market capitalization- Market cap of banking stocks grew by a factor of 9- Lacking evidence supporting commensurate improvements in companies’ fundamentals- Stage set for a “bubble”

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Slide 5: Fuel for Unsustainable Growth?

Low financial literacy, market discipline and consumer sophistication- Spike in retail participation with first-time investors pouring into the market- ASI surged 225.37%; market cap of listed equities grew 841.46%- Investment decisions based on speculation (herd mentality)- Easy access to loan facilities usurped the need for proper financial planning- Risk management processes were overlooked in anticipation of higher return on

investments and loans by banks- Unprecedented level of bank over-exposure and high rates of margin lending

Inadequate regulatory framework failed to enforce rules of the capital market- Inadequate disclosure by listed companies and broker-dealer firms- Lack of enforcement by the regulators

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Slide 6: Dominance of the Bear

Global Financial Crisis- 2011 market downturn- Euro debt crisis

Nigerian Banking Crisis- N30b ($119.13m) market cap erased in one day; Banking Index down 34.69%

Low broker-dealer participation rates- Margin loan debt overhang and lack of access to financing (CBN prudential guidelines)

Unfavorable interest rates- Move to fixed income and money markets (returns of 12+%)

Eroded investor confidence- Of both Institutional and Retail domestic investors- Demonstrated by high foreign participation rates (hovering around the 80% mark)

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Slide 7: Challenges in the Domestic Markets

Every exchange’s objective is to be the primary source for raising capital, and the NSE is no exception. We struggle to (1) attract companies that qualify for public listing, and (2) to offer a deep, transparent and accessible capital market. Why?

The reasons span our cultural dispositions through inadequate financial literacy to uncertainty about policies on investor protection.

The NSE is working to address the supply and demand sides of our business, and on developing scale, scope and efficiency to become a key player at the regional and global levels.

Privatization and reforms to pension, insurance and fund policies, have been known to positively impact the growth of capital markets. This is equally important for the Nigerian market, whereby privatization could increase the number of listed shares on the exchange with IPOs, and provide promise for private equity, while encouraging participation by a wider group of investors. (e.g., the announcement to privatize 6 power generation companies, 11 power distribution companies and 2 telecom companies.) Policy reform would increaseinstitutional demand for investments, and effect an increase in individual savings rates.

Automation is also key, and is a necessity for minimizing risks, reducing costs, increasing investor attention to the region, and speeding up processes; while automation andreciprocity (combined) are requisite for linking markets across borders to attract a broader investor base, and to increase the number of companies that look to the market for growth.

And finally, demutualization, an important milestone for the Nigerian Stock Exchange, would provide the opportunity to operate as a for-profit company, with access to similar benefits enjoyed by companies owned by shareholders.

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Slide 8: From Frontier to Emerging

Based on MSCI’s criteria for Frontier, Emerging and Developed markets, the Nigerian Stock Exchange is clearly repositioning itself for growth that would lead to becoming an Emerging market. To take it a step further, this chart includes two of FTSE’s qualitative criteria.

The NSE is positioning the Exchange to become the leading exchange in Africa and in sub-Saharan Africa. Our key initiatives center around growing our market capitalization, leveraging on increased listings, product diversity, enforcement, enabling technology, enhanced market structure, investor education, changes to policy, and much more. These are detailed in the following slides, represented by our short-to-mid term initiatives.

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Slide 9: Aggressive Goals and Objectives

5 Products in 5 Years- Equities, Bonds, ETPs, Options (Equity and Index) and Futures (FX and Interest Rates)- Growth-enabling market structure

Targeted Business Development Efforts1. Listings Sales and Retention department2. Focus on key industries that are crucial to the economy but under-represented in the market –

Agriculture, Oil & Gas, Telecommunications, Utilities3. Value-added services – Corporate Governance, Investor Relations, Institutional Services, Equity

Research Coverage, and Corporate Access for listed companies

21st Century Technology Strategies1. Technology infrastructure – X-Net (VPN) for brokers; development of the NASDAQ OMX X-stream

trading platform; a new corporate database; and standardization (using Financial Information eXchange (FIX) protocol)

2. Market data services – new data policy; feeds, subscriptions, reports for market participants3. NSE Web site – Access and market information for investors and all stakeholders

Strong Regulatory Environment1. Supervision, monitoring and enforcement of rules – new penalties for violations2. Compliance – 90% for submission of financial accounts (was 5% in 2010) for broker dealers; and

96.81% for submission of financial results (2010) for listed companies3. Investigation Panel – reconstituted; new Code of Conduct4. Disclosure Standards – updated penalties for violations5. Corporate Governance – annual certification requirement6. Automated Surveillance7. Implementation of Market Quality analysis8. Updated Regulatory processes – Rule Book revision, Rule-making processes, Interpretative

guidance9. First-rate X-Compliance reporting10. Reconstitution of Investor Protection Fund (IPF) Board of Trustees

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Slide 10: Reform Agenda

PFA Investment Guidelines – PENCOM- Recent addition of PE as an investment vehicle- Minimum equity allocation policy (recently approved 10% min. of pension funds) and approval for investment in ETPs (not just equity based ETFs)

Tax Breaks on Transaction Fees and Tax Holidays for Listed Companies – FIRS- Currently as high as 12% (7% in VAT and 5% in stamp duties)- Advocating elimination of VAT- Advocating removal of stamp duties (dematerialization) or apply only to the buy side- Advocating tax holidays or reduced tax rates for companies that list

Policy on Listing of Large Cap Firms to Deepen the Market - FGN and NASS- Advocating policies encouraging large firms in the Telecoms, Power, Agriculture, Mining, and E&P (upstream O&G) to list

Access to SWF Funds - FMF- Advocating inclusion of the capital market in its investment strategy

Exit Strategy for Privatized Entities – BPE- Advocating portion of the shares (e.g., 20%) of entities earmarked for privatization be listed on the exchange and sold to strategic investors simultaneously

Reduce Focus on Dividends – FMF, SEC and PENCOM- Advocating revision of dividend measurement metric in ISA 2007 and PENCOM rules for a “good performing” company

Capacity of Local Institutional Investors – SEC- Advocating development of the Asset Management industry – strengthening of licensing requirements for asset managers

Broker Margin Debt Resolution – FMF- Advocating margin debt loss limits at 100% of collateral provided by the borrower

Broker Access to Funding – CBN and SEC- Advocating exemption of market makers registered by the NSE from prudential guidelines

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Slide 11: Technology – The Critical Component

E2E automation is a critical component for minimizing risks, reducing costs, increasing investor attention to the region, and speeding up processes.

In 2011, the Exchange performed an audit on its technology infrastructure – network bandwidth, availability, up-time and processing capabilities – to identify opportunities for improving access to the NSE’s network. The Exchange successfully cut unnecessary wastage across the board, resulting in reduced latency, faster communication with trading systems, higher reliability, improved processing times, and 99.9% availability of Web and mail services.

In Q1 2012, the Exchange launched its high-performance, high-capacity, low-cost VPN (X-net)for brokers. This supports the NSE’s strategy to enable cost-effective and efficient execution of trades from remote locations. It will form a major backbone of the ongoing technology transformation.

The Exchange also executed an agreement with NASDAQ OMX for the deployment of the new trading platform, X-stream. Development will begin shortly for a Q3 2013 launch. With the X-stream matching engine, the NSE will have the fastest trading engine on the continent. Leveraging on FIX protocol, SDKs and SWIFT capabilities, the new trading engine will facilitate the Exchange’s goal to become a key player in the global market. And by combining automation with reciprocity, the NSE will be able to link markets across borders, to attract a broader investor base, and to increase the number of companies that look to the market for growth.

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Slide 12: Beginning of a New Cycle?

Are the results of the reforms working?

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Slide 13: Market’s Recent Performance

The market seems to be recovering gradually on the back of solid financial performance in Consumer Goods and Banking sectors. The various measures taken by NSE seem to be returning confidence to both local and foreign investors. As at the end of April 2012, the market recorded an 8-month high (breaking the N7t mark).

Note: The unusual spike in the performance of the Consumer Goods Index between December 2011 and January 2012 is due to the rebranding and rebalancing of the former Food/Beverage Index. As of January 2012 the Food/Beverage Index was rebranded the Consumer Goods Index to complement the Segmentation exercise the Exchange completed in September 2011. All stocks listed under the Consumer Goods sector became eligible for inclusion in the index whereby only stocks listed in the former Food and Beverages subsectors were eligible. However, the index’s performance from February 2012 onwards is attributed to solid performance in the sector.

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Slide 14: The Gateway to African Markets

As previously stated, foreign investors currently account for approximately 67% of total market transactions (or 81% of total inflows). The Exchange continues to evolve to meet the needs of our valued customers, and to achieve the highest level of competitiveness.

We operate a fair, orderly and transparent market that brings together the best of African enterprises, and the local and global investor communities. While we value the active foreign participants in our market, we continue to market our platform and services to attract more foreign participation.

The NSE is focused on meeting our broad objective to be an African institution that competes effectively in the global marketplace. Anticipation of our continued reforms, achieving the highest level of efficiency, and the enhancement of our market structure, will enable the Nigerian Stock Exchange make the most of technology to increase our ‘reach’ beyond borders ever imagined in the African capital markets as a whole.

The NSE’s continued focus on rules and processes that meet international best practices are key to servicing all our customers – investors, issuers and operators. Our plans to offer open access to our market will make it easier for your local brokerage firm to accommodate your preference for frontier and emerging market securities; and upon completion of our demutualization process, the Exchange will be in a position to operate as a business with greater flexibility to meet what some skeptics consider to be “very optimistic” goals.

These are undoubtedly exciting times for the Nigerian capital market, and we look forward to welcoming you to (or back to) our market.

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Slide 15: Q&A

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